THE IMPACT OF EU TAXONOMY ON CORPORATE INVESTMENTS

Caterina Lucarelli, Camilla Mazzoli (), Michela Rancan and Sabrina Severini ()
Additional contact information
Camilla Mazzoli: Department of Management, Università Politecnica delle Marche Piazzale R. Martelli 8, 60121 Ancona, Italy
Sabrina Severini: Department of Management, Università Politecnica delle Marche Piazzale R. Martelli 8, 60121 Ancona, Italy

Journal of Financial Management, Markets and Institutions (JFMMI), 2023, vol. 11, issue 01, 1-32

Abstract: The European Union Taxonomy on Sustainable Finance is the first comprehensive classification designed to identify the extent to which an economic activity is environmentally sustainable. This paper investigates how the EU Taxonomy affected corporate investments for Taxonomy-eligible companies compared to non-eligible ones. We applied a difference-in-difference model using a dataset of 130,918 firms from 27 EU Member States, using 2019 as a threshold. Our findings show that the introduction of the EU Taxonomy per se did not result in an increase in corporate investments among Taxonomy-eligible companies; rather, firms’ size and Taxonomy-eligibility uncertainty played a key role in explaining variation in corporate investments. The implications are twofold: the participatory and communication approach of the European Commission implemented with the EU Taxonomy is effective in nudging corporate investments aimed at sustainability. However, this only happens when the regulation provides an unambiguous sector specification. Thus, it is important that the regulatory interventions clearly define what is sustainable.

Keywords: EU Taxonomy; sustainable finance; climate change; corporate investments; difference-in-difference model; uncertainty; regulatory pressure; nudge; environmental sustainability (search for similar items in EconPapers)
JEL-codes: G31 G38 Q56 (search for similar items in EconPapers)
Date: 2023
References: Add references at CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://www.worldscientific.com/doi/abs/10.1142/S2282717X23500044
Open Access

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:wsi:jfmmix:v:11:y:2023:i:01:n:s2282717x23500044

Ordering information: This journal article can be ordered from

DOI: 10.1142/S2282717X23500044

Access Statistics for this article

Journal of Financial Management, Markets and Institutions (JFMMI) is currently edited by Santiago Carbo-Valverde

More articles in Journal of Financial Management, Markets and Institutions (JFMMI) from World Scientific Publishing Co. Pte. Ltd.
Bibliographic data for series maintained by Tai Tone Lim ().